Kraft Heinz Reports Fourth Quarter and Full Year 2017 Results
- Q4 net sales increased 0.3%; Organic Net Sales(1) decreased 0.6%
- Q4 net income attributable to common shareholders increased to
$8.0 billion ; Adjusted EBITDA(1) increased 3.2% on a constant currency basis - Q4 diluted EPS increased to
$6.52 ; Adjusted EPS(1) decreased to$0.90 from$0.91 the prior year
“There's no question that our financial performance in 2017 did not
reflect our progress or potential,” said
“Since the HR-1 Tax Cuts and Jobs Act was signed into law, we have
already taken actions and are accelerating key business initiatives,”
said Kraft Heinz CFO
Q4 2017 Financial Summary |
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For the Quarter Ended | Year-over-year Change | |||||||||||||
December 30, | December 31, | Impact of | ||||||||||||
2017 | 2016 | Actual | Currency | Organic | ||||||||||
(in millions, except per share data) | ||||||||||||||
Net sales | $ | 6,877 | $ | 6,857 | 0.3 | % | 0.9 pp | (0.6 | )% | |||||
Operating income | 1,640 | 1,580 | 3.8 | % | ||||||||||
Net income/(loss) attributable to common shareholders | 8,003 | 944 | 747.8 | % | ||||||||||
Diluted EPS | $ | 6.52 | $ | 0.77 | 746.8 | % | ||||||||
Adjusted EBITDA(1) | 2,015 | 1,937 | 4.0 | % | 0.8 pp | |||||||||
Adjusted EPS(1) | $ | 0.90 | $ | 0.91 | (1.1 | )% |
Net sales were
Net income attributable to common shareholders increased to
Q4 2017 Business Segment Highlights | ||||||||||||||
United States | ||||||||||||||
For the Quarter Ended | Year-over-year Change | |||||||||||||
December 30, | December 31, | Impact of | ||||||||||||
2017 | 2016 | Actual | Currency | Organic | ||||||||||
(in millions) | ||||||||||||||
Net sales | $ | 4,787 | $ | 4,839 | (1.1 | )% | 0.0 pp | (1.1 | )% | |||||
Segment Adjusted EBITDA | 1,523 | 1,502 | 1.4 | % | 0.0 pp |
United States Segment Adjusted EBITDA increased 1.4 percent versus the
year-ago period to
Canada |
||||||||||||||
For the Quarter Ended | Year-over-year Change | |||||||||||||
December 30, | December 31, | Impact of | ||||||||||||
2017 | 2016 | Actual | Currency | Organic | ||||||||||
(in millions) | ||||||||||||||
Net sales | $ | 591 | $ | 617 | (4.1 | )% | 4.5 pp | (8.6 | )% | |||||
Segment Adjusted EBITDA | 162 | 151 | 7.1 | % | 5.2 pp |
Canada Segment Adjusted EBITDA increased 7.1 percent versus the year-ago
period to
Europe(4) |
||||||||||||||
For the Quarter Ended | Year-over-year Change | |||||||||||||
December 30, | December 31, | Impact of | ||||||||||||
2017 | 2016 | Actual | Currency | Organic | ||||||||||
(in millions) | ||||||||||||||
Net sales | $ | 656 | $ | 600 | 9.3 | % | 8.4 pp | 0.9 | % | |||||
Segment Adjusted EBITDA | 203 | 189 | 7.4 | % | 8.0 pp |
Europe Segment Adjusted EBITDA increased 7.4 percent versus the year-ago
period to
Rest of World(4)(5) |
||||||||||||||
For the Quarter Ended | Year-over-year Change | |||||||||||||
December 30, | December 31, | Impact of | ||||||||||||
2017 | 2016 | Actual | Currency | Organic | ||||||||||
(in millions) | ||||||||||||||
Net sales | $ | 843 | $ | 801 | 5.2 | % | (1.8) pp | 7.0 | % | |||||
Segment Adjusted EBITDA | 142 | 144 | (0.8 | )% | (4.4) pp |
Rest of World net sales were
Rest of World Segment Adjusted EBITDA decreased 0.8 percent versus the
year-ago period to
End Notes |
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(1) | Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures. Please see discussion of non-GAAP financial measures and the reconciliations at the end of this press release for more information. | |
(2) | Cost savings initiatives include the Company's integration, restructuring and ongoing productivity efforts. | |
(3) | The Company's key commodities in the United States and Canada are dairy, meat, coffee and nuts. | |
(4) | In the third quarter of 2017, we announced our plans to reorganize certain of our international businesses to better align our global geographies. These plans include moving our Middle East and Africa businesses from the AMEA segment into the Europe segment, forming the Europe, Middle East, and Africa (“EMEA”) segment. The remaining AMEA businesses will become the Asia Pacific (“APAC”) segment, which will remain in Rest of World. We expect these changes to become effective in the first quarter of 2018. As a result, we expect to restate our Europe and Rest of World segments to reflect these changes for historical periods presented in the first quarter of 2018. | |
(5) | Rest of World is comprised of two operating segments: Latin America; and Asia Pacific, Middle East and Africa (“AMEA”). | |
Webcast and Conference Call Information
A webcast of The
ABOUT THE
The
Forward-Looking Statements
This press release contains a number of forward-looking statements. Words such as "expect," "advantage," "continue," "remain," "execute," "expand," "drive," "believe," "will," and variations of such words and similar expressions are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding the Company's plans, objectives, cost savings initiatives, opportunities, capabilities, investments, execution and growth. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties, many of which are difficult to predict and beyond the Company's control.
Important factors that may affect the Company's business and operations
and that may cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, operating in
a highly competitive industry; changes in the retail landscape or the
loss of key retail customers; the Company’s ability to maintain, extend
and expand its reputation and brand image; the impacts of the Company’s
international operations; the Company’s ability to leverage its brand
value; the Company’s ability to predict, identify and interpret changes
in consumer preferences and demand; the Company’s ability to drive
revenue growth in its key product categories, increase its market share,
or add products; an impairment of the carrying value of goodwill or
other indefinite-lived intangible assets; volatility in commodity,
energy and other input costs; changes in the Company’s management team
or other key personnel; the Company’s ability to realize the anticipated
benefits from its cost savings initiatives; changes in relationships
with significant customers and suppliers; the execution of the Company’s
international expansion strategy; tax law changes or interpretations;
legal claims or other regulatory enforcement actions; product recalls or
product liability claims; unanticipated business disruptions; the
Company’s ability to complete or realize the benefits from potential and
completed acquisitions, alliances, divestitures or joint ventures;
economic and political conditions in
Non-GAAP Financial Measures
To supplement the financial information, the Company has presented
Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA,
and Adjusted EPS, which are considered non-GAAP financial measures. The
non-GAAP financial measures provided should be viewed in addition to,
and not as an alternative for, results prepared in accordance with
accounting principles generally accepted in
Management uses these non-GAAP financial measures to assist in comparing the Company's performance on a consistent basis for purposes of business decision making by removing the impact of certain items that management believes do not directly reflect the Company's underlying operations. Management believes that presenting the Company's non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items, (ii) permits investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating the Company's results. The Company believes that the presentation of these non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provides investors with additional understanding of the factors and trends affecting the Company's business than could be obtained absent these disclosures.
Organic Net Sales is defined as net sales excluding, when they occur,
the impact of acquisitions, currency, divestitures and a 53rd week of
shipments. The Company calculates the impact of currency on net sales by
holding exchange rates constant at the previous year's exchange rate,
with the exception of
Adjusted EBITDA is defined as net income/(loss) from continuing
operations before interest expense, other expense/(income), net, and
provision for/(benefit from) income taxes; in addition to these
adjustments, the Company excludes, when they occur, the impacts of
depreciation and amortization (excluding integration and restructuring
expenses; including amortization of postretirement benefit plans prior
service credits), integration and restructuring expenses, merger costs,
unrealized losses/(gains) on commodity hedges, impairment losses,
losses/(gains) on the sale of a business, nonmonetary currency
devaluation (e.g., remeasurement gains and losses), and equity award
compensation expense (excluding integration and restructuring expenses).
The Company also presents Adjusted EBITDA on a constant currency basis.
The Company calculates the impact of currency on Adjusted EBITDA by
holding exchange rates constant at the previous year's exchange rate,
with the exception of
Adjusted EPS is defined as diluted earnings per share excluding, when they occur, the impacts of integration and restructuring expenses, merger costs, unrealized losses/(gains) on commodity hedges, impairment losses, losses/(gains) on the sale of a business, nonmonetary currency devaluation (e.g., remeasurement gains and losses), and U.S. Tax Reform, and including when they occur, adjustments to reflect preferred stock dividend payments on an accrual basis. The Company believes Adjusted EPS provides important comparability of underlying operating results, allowing investors and management to assess operating performance on a consistent basis.
See the attached schedules for supplemental financial data, which includes the financial information, the non-GAAP financial measures and corresponding reconciliations to the comparable GAAP financial measures for the relevant periods.
Schedule 1 |
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The Kraft Heinz Company | ||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Quarter Ended | For the Year Ended | |||||||||||||||
December 30, | December 31, | December 30, | December 31, | |||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(13 weeks) | (13 weeks) | (52 weeks) | (52 weeks) | |||||||||||||
Net sales | $ | 6,877 | $ | 6,857 | $ | 26,232 | $ | 26,487 | ||||||||
Cost of products sold(a) | 4,470 | 4,398 | 16,529 | 16,901 | ||||||||||||
Gross profit | 2,407 | 2,459 | 9,703 | 9,586 | ||||||||||||
Selling, general and administrative expenses(b) | 767 | 879 | 2,930 | 3,444 | ||||||||||||
Operating income | 1,640 | 1,580 | 6,773 | 6,142 | ||||||||||||
Interest expense | 308 | 310 | 1,234 | 1,134 | ||||||||||||
Other expense/(income), net | 1 | (10 | ) | 9 | (15 | ) | ||||||||||
Income/(loss) before income taxes | 1,331 | 1,280 | 5,530 | 5,023 | ||||||||||||
Provision for/(benefit from) income taxes | (6,665 | ) | 336 | (5,460 | ) | 1,381 | ||||||||||
Net income/(loss) | 7,996 | 944 | 10,990 | 3,642 | ||||||||||||
Net income/(loss) attributable to noncontrolling interest | (7 | ) | — | (9 | ) | 10 | ||||||||||
Net income/(loss) attributable to Kraft Heinz | 8,003 | 944 | 10,999 | 3,632 | ||||||||||||
Preferred dividends(c) | — | — | — | 180 | ||||||||||||
Net income/(loss) attributable to common shareholders | $ | 8,003 | $ | 944 | $ | 10,999 | $ | 3,452 | ||||||||
Basic shares outstanding | 1,219 | 1,217 | 1,218 | 1,217 | ||||||||||||
Diluted shares outstanding | 1,228 | 1,226 | 1,228 | 1,226 | ||||||||||||
Per share data applicable to common shareholders: | ||||||||||||||||
Basic earnings/(loss) per share | $ | 6.57 | $ | 0.78 | $ | 9.03 | $ | 2.84 | ||||||||
Diluted earnings/(loss) per share | 6.52 | 0.77 | 8.95 | 2.81 |
(a) | Integration and restructuring expenses recorded in cost of products sold were $200 million for the quarter ended December 30, 2017 ($146 million after-tax), $179 million for the quarter ended December 31, 2016 ($130 million after-tax), $324 million for the year ended December 30, 2017 ($239 million after-tax), and $711 million for the year ended December 31, 2016 ($491 million after-tax). | |
(b) | Integration and restructuring expenses recorded in selling, general and administrative expenses were $20 million in the quarter ended December 30, 2017 ($14 million after-tax), $52 million in the quarter ended December 31, 2016 ($38 million after-tax), $133 million in the year ended December 30, 2017 ($91 million after-tax), and $301 million in the year ended December 31, 2016 ($207 million after-tax). | |
(c) | On June 7, 2016, the Company redeemed all outstanding shares of our Series A Preferred Stock. Accordingly, the Company no longer pays any associated dividends, and there were no such dividend payments in 2017. Prior to the redemption, the Company made cash distributions of $180 million in the second quarter of 2016. The Company's Series A Preferred Stock entitled holders to a 9.00% annual dividend, to be paid in four dividends, in arrears on each March 7, June 7, and December 7, in cash. Concurrent with the declaration of our common stock dividend on December 8, 2015, we also declared and paid the Series A Preferred Stock dividend that would otherwise have been payable on March 7, 2016. Accordingly, there were no cash distributions related to the Series A Preferred Stock in the first quarter of 2016, resulting in only one dividend payment in 2016 prior to redemption. | |
Schedule 2 |
|||||||||||||||
The Kraft Heinz Company | |||||||||||||||
Reconciliation of Net Sales to Organic Net Sales | |||||||||||||||
For the Quarter Ended | |||||||||||||||
(dollars in millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Impact of | Organic Net | ||||||||||||||
Net Sales | Currency | Sales | Price | Volume/Mix | |||||||||||
December 30, 2017 (13 weeks) |
|||||||||||||||
United States | $ | 4,787 | $ | — | $ | 4,787 | |||||||||
Canada | 591 | 27 | 564 | ||||||||||||
Europe | 656 | 50 | 606 | ||||||||||||
Rest of World | 843 |
8 |
835 | ||||||||||||
$ | 6,877 | $ | 85 | $ | 6,792 | ||||||||||
December 31, 2016 (13 weeks) |
|||||||||||||||
United States | $ | 4,839 | $ | — | $ | 4,839 | |||||||||
Canada | 617 | — | 617 | ||||||||||||
Europe | 600 | — | 600 | ||||||||||||
Rest of World | 801 | 21 | 780 | ||||||||||||
$ | 6,857 | $ | 21 | $ | 6,836 | ||||||||||
Year-over-year growth rates | |||||||||||||||
United States | (1.1 | )% | 0.0 pp | (1.1 | )% | 0.6 pp | (1.7) pp | ||||||||
Canada | (4.1 | )% | 4.5 pp | (8.6 | )% | 0.0 pp | (8.6) pp | ||||||||
Europe | 9.3 | % | 8.4 pp | 0.9 | % | (0.9) pp | 1.8 pp | ||||||||
Rest of World | 5.2 | % | (1.8) pp | 7.0 | % | 5.7 pp | 1.3 pp | ||||||||
Kraft Heinz | 0.3 | % | 0.9 pp | (0.6 | )% | 1.0 pp | (1.6) pp | ||||||||
Schedule 3 |
|||||||||||||||
The Kraft Heinz Company | |||||||||||||||
Reconciliation of Net Sales to Organic Net Sales | |||||||||||||||
For the Year Ended | |||||||||||||||
(dollars in millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Impact of | Organic Net | ||||||||||||||
Net Sales | Currency | Sales | Price | Volume/Mix | |||||||||||
December 30, 2017 |
|||||||||||||||
United States | $ | 18,353 | $ | — | $ | 18,353 | |||||||||
Canada | 2,190 | 42 | 2,148 | ||||||||||||
Europe | 2,393 | 8 | 2,385 | ||||||||||||
Rest of World | 3,296 | 13 | 3,283 | ||||||||||||
$ | 26,232 | $ | 63 | $ | 26,169 | ||||||||||
December 31, 2016 |
|||||||||||||||
United States | $ | 18,641 | $ | — | $ | 18,641 | |||||||||
Canada | 2,309 | — | 2,309 | ||||||||||||
Europe | 2,366 | — | 2,366 | ||||||||||||
Rest of World | 3,171 | 55 | 3,116 | ||||||||||||
$ | 26,487 | $ | 55 | $ | 26,432 | ||||||||||
Year-over-year growth rates | |||||||||||||||
United States | (1.5 | )% | 0.0 pp | (1.5 | )% | 0.4 pp | (1.9) pp | ||||||||
Canada | (5.2 | )% | 1.8 pp | (7.0 | )% | (1.7) pp | (5.3) pp | ||||||||
Europe | 1.1 | % | 0.3 pp | 0.8 | % | (0.9) pp | 1.7 pp | ||||||||
Rest of World | 3.9 | % | (1.5) pp | 5.4 | % | 4.6 pp | 0.8 pp | ||||||||
Kraft Heinz | (1.0 | )% | 0.0 pp | (1.0 | )% | 0.5 pp | (1.5) pp | ||||||||
Schedule 4 |
||||||||||||||||
The Kraft Heinz Company | ||||||||||||||||
Reconciliation of Net Income/(Loss) to Adjusted EBITDA | ||||||||||||||||
(dollars in millions) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Quarter Ended | For the Year Ended | |||||||||||||||
December 30, | December 31, | December 30, | December 31, | |||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(13 weeks) | (13 weeks) | (52 weeks) | (52 weeks) | |||||||||||||
Net income/(loss) | $ | 7,996 | $ | 944 | $ | 10,990 | $ | 3,642 | ||||||||
Interest expense | 308 | 310 | 1,234 | 1,134 | ||||||||||||
Other expense/(income), net | 1 | (10 | ) | 9 | (15 | ) | ||||||||||
Provision for/(benefit from) income taxes | (6,665 | ) | 336 | (5,460 | ) | 1,381 | ||||||||||
Operating income | 1,640 | 1,580 | 6,773 | 6,142 | ||||||||||||
Depreciation and amortization (excluding integration and restructuring expenses) | 149 | 135 | 583 | 536 | ||||||||||||
Integration and restructuring expenses | 220 | 231 | 457 | 1,012 | ||||||||||||
Merger costs | — | (3 | ) | — | 30 | |||||||||||
Unrealized losses/(gains) on commodity hedges | (5 | ) | (15 | ) | 19 | (38 | ) | |||||||||
Impairment losses | — | — | 49 | 53 | ||||||||||||
Nonmonetary currency devaluation | — | — | — | 4 | ||||||||||||
Equity award compensation expense (excluding integration and restructuring expenses) | 11 | 9 | 49 | 39 | ||||||||||||
Adjusted EBITDA | $ | 2,015 | $ | 1,937 | $ | 7,930 | $ | 7,778 | ||||||||
Segment Adjusted EBITDA: | ||||||||||||||||
United States | $ | 1,523 | $ | 1,502 | $ | 6,001 | $ | 5,862 | ||||||||
Canada | 162 | 151 | 639 | 642 | ||||||||||||
Europe | 203 | 189 | 781 | 781 | ||||||||||||
Rest of World | 142 | 144 | 617 | 657 | ||||||||||||
General corporate expenses | (15 | ) | (49 | ) | (108 | ) | (164 | ) | ||||||||
Adjusted EBITDA | $ | 2,015 | $ | 1,937 | $ | 7,930 | $ | 7,778 | ||||||||
Schedule 5 |
|||||||||||
The Kraft Heinz Company | |||||||||||
Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA | |||||||||||
For the Quarter Ended | |||||||||||
(dollars in millions) | |||||||||||
(Unaudited) | |||||||||||
Adjusted EBITDA | Impact of Currency |
Constant Currency |
|||||||||
December 30, 2017 |
|||||||||||
United States | $ | 1,523 | $ | — | $ | 1,523 | |||||
Canada | 162 | 8 | 154 | ||||||||
Europe | 203 | 14 | 189 | ||||||||
Rest of World | 142 | 1 | 141 | ||||||||
General corporate expenses | (15 | ) | — | (15 | ) | ||||||
$ | 2,015 | $ | 23 | $ | 1,992 | ||||||
December 31, 2016 |
|||||||||||
United States | $ | 1,502 | $ | — | $ | 1,502 | |||||
Canada | 151 | — | 151 | ||||||||
Europe | 189 | — | 189 | ||||||||
Rest of World | 144 | 6 | 138 | ||||||||
General corporate expenses | (49 | ) | — | (49 | ) | ||||||
$ | 1,937 | $ | 6 | $ | 1,931 | ||||||
Year-over-year growth rates | |||||||||||
United States | 1.4 | % | 0.0 pp | 1.4 | % | ||||||
Canada | 7.1 | % | 5.2 pp | 1.9 | % | ||||||
Europe | 7.4 | % | 8.0 pp | (0.6 | )% | ||||||
Rest of World | (0.8 | )% | (4.4) pp | 3.6 | % | ||||||
General corporate expenses | (68.9 | )% | 1.2 pp | (70.1 | )% | ||||||
Kraft Heinz | 4.0 | % | 0.8 pp | 3.2 | % | ||||||
Schedule 6 |
||||||||||||
The Kraft Heinz Company | ||||||||||||
Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA | ||||||||||||
For the Year Ended | ||||||||||||
(dollars in millions) | ||||||||||||
(Unaudited) | ||||||||||||
Adjusted EBITDA | Impact of Currency |
Constant Currency |
||||||||||
December 30, 2017 |
||||||||||||
United States | $ | 6,001 | $ | — | $ | 6,001 | ||||||
Canada | 639 | 11 | 628 | |||||||||
Europe | 781 | (13 | ) | 794 | ||||||||
Rest of World | 617 | — | 617 | |||||||||
General corporate expenses | (108 | ) | — | (108 | ) | |||||||
$ | 7,930 | $ | (2 | ) | $ | 7,932 | ||||||
December 31, 2016 |
||||||||||||
United States | $ | 5,862 | $ | — | $ | 5,862 | ||||||
Canada | 642 | — | 642 | |||||||||
Europe | 781 | — | 781 | |||||||||
Rest of World | 657 | 22 | 635 | |||||||||
General corporate expenses | (164 | ) | — | (164 | ) | |||||||
$ | 7,778 | $ | 22 | $ | 7,756 | |||||||
Year-over-year growth rates | ||||||||||||
United States | 2.4 | % | 0.0 pp | 2.4 | % | |||||||
Canada | (0.5 | )% | 1.7 pp | (2.2 | )% | |||||||
Europe | — | % | (1.6) pp | 1.6 | % | |||||||
Rest of World | (6.1 | )% | (3.4) pp | (2.7 | )% | |||||||
General corporate expenses | (34.0 | )% | 0.4 pp | (34.4 | )% | |||||||
Kraft Heinz | 1.9 | % | (0.4) pp | 2.3 | % | |||||||
Schedule 7 |
||||||||
The Kraft Heinz Company | ||||||||
Reconciliation of Diluted EPS to Adjusted EPS | ||||||||
For the Quarter Ended | ||||||||
(Unaudited) | ||||||||
December 30, | December 31, | |||||||
2017 | 2016 | |||||||
(13 weeks) | (13 weeks) | |||||||
Diluted EPS | $ | 6.52 | $ | 0.77 | ||||
Integration and restructuring expenses(a)(c) | 0.11 | 0.13 | ||||||
Merger costs(a)(b) | — | — | ||||||
Unrealized losses/(gains) on commodity hedges(a)(b) | — | (0.01 | ) | |||||
Impairment losses(a)(b) | — | — | ||||||
Nonmonetary currency devaluation(a)(d) | — | 0.02 | ||||||
U.S. Tax Reform(e) | (5.73 | ) | — | |||||
Adjusted EPS | $ | 0.90 | $ | 0.91 |
(a) | Income tax expense associated with these items is based on applicable jurisdictional tax rates and deductibility assessments of individual items. | |
(b) | Refer to the reconciliation of net income/(loss) to Adjusted EBITDA for the related gross expenses. | |
(c) | Integration and restructuring expenses included the following gross expenses: | |
• Expenses recorded in cost of products sold were $200 million in 2017 and $179 million in 2016; and |
||
• Expenses recorded in SG&A were $20 million in 2017 and $52 million in 2016; and |
||
• Expenses recorded in other expense/(income), net, were income of $2 million in 2016 (there were no such expenses in 2017). |
||
(d) | Nonmonetary currency devaluation included the following gross expenses: | |
• Expenses recorded in other expense/(income), net, of $23 million in 2016 (there were no such expenses in 2017) |
||
(e) | U.S. Tax Reform included a tax benefit of $7.0 billion in 2017 related to enactment of the Tax Cuts and Jobs Act by the U.S. government on December 22, 2017. There were no such expenses in 2016. | |
Schedule 8 |
||||||||
The Kraft Heinz Company | ||||||||
Reconciliation of Diluted EPS to Adjusted EPS | ||||||||
For the Year Ended | ||||||||
(Unaudited) | ||||||||
December 30, | December 31, | |||||||
2017 | 2016 | |||||||
(52 weeks) | (52 weeks) | |||||||
Diluted EPS | $ | 8.95 | $ | 2.81 | ||||
Integration and restructuring expenses(a)(b) | 0.26 | 0.57 | ||||||
Merger costs(a)(b) | — | 0.02 | ||||||
Unrealized losses/(gains) on commodity hedges(a)(b) | 0.01 | (0.02 | ) | |||||
Impairment losses(a)(b) | 0.03 | 0.03 | ||||||
Nonmonetary currency devaluation(a)(c) | 0.03 | 0.02 | ||||||
Preferred dividend adjustment(d) | — | (0.10 | ) | |||||
U.S. Tax Reform(e) | (5.73 | ) | — | |||||
Adjusted EPS | $ | 3.55 | $ | 3.33 |
(a) | Income tax expense associated with these items is based on applicable jurisdictional tax rates and deductibility assessments of individual items. | |
(b) | Refer to the reconciliation of net income/(loss) to Adjusted EBITDA for the related gross expenses. | |
(c) | Nonmonetary currency devaluation included the following gross expenses: | |
• Expenses recorded in cost of products sold were $4 million in 2016 (there were no such expenses in 2017); and |
||
• Expenses recorded in other expense/(income), net, were $36 million in 2017 and $24 million in 2016. |
||
(d) | For Adjusted EPS, the Company presents the impact of the Series A Preferred Stock dividend payments on an accrual basis. Accordingly, the Company included adjustments to EPS to include $180 million of Series A Preferred Stock dividends in the first quarter of 2016 (to reflect the March 7, 2016 Series A Preferred Stock dividend that was paid in December 2015), and to exclude $51 million of Series A Preferred Stock dividends from the second quarter of 2016 (to reflect that it was redeemed on June 7, 2016). | |
(e) | U.S. Tax Reform included a tax benefit of $7.0 billion in 2017 related to enactment of the Tax Cuts and Jobs Act by the U.S. government on December 22, 2017. There were no such expenses in 2016. | |
Schedule 9 |
||||||||
The Kraft Heinz Company | ||||||||
Consolidated Balance Sheets | ||||||||
(in millions, except per share data) | ||||||||
(Unaudited) | ||||||||
December 30, 2017 | December 31, 2016 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 1,629 | $ | 4,204 | ||||
Trade receivables, net | 921 | 769 | ||||||
Sold receivables | 353 | 129 | ||||||
Income taxes receivable | 582 | 260 | ||||||
Inventories | 2,815 | 2,684 | ||||||
Other current assets | 966 | 707 | ||||||
Total current assets | 7,266 | 8,753 | ||||||
Property, plant and equipment, net | 7,120 | 6,688 | ||||||
Goodwill | 44,824 | 44,125 | ||||||
Intangible assets, net | 59,449 | 59,297 | ||||||
Other assets | 1,573 | 1,617 | ||||||
TOTAL ASSETS | $ | 120,232 | $ | 120,480 | ||||
LIABILITIES AND EQUITY | ||||||||
Commercial paper and other short-term debt | $ | 460 | $ | 645 | ||||
Current portion of long-term debt | 2,743 | 2,046 | ||||||
Trade payables | 4,449 | 3,996 | ||||||
Accrued marketing | 680 | 749 | ||||||
Accrued postemployment costs | 51 | 157 | ||||||
Income taxes payable | 152 | 255 | ||||||
Interest payable | 419 | 415 | ||||||
Other current liabilities | 1,178 | 1,238 | ||||||
Total current liabilities | 10,132 | 9,501 | ||||||
Long-term debt | 28,333 | 29,713 | ||||||
Deferred income taxes | 14,076 | 20,848 | ||||||
Accrued postemployment costs | 427 | 2,038 | ||||||
Other liabilities | 1,017 | 806 | ||||||
TOTAL LIABILITIES | 53,985 | 62,906 | ||||||
Redeemable noncontrolling interest | 6 | — | ||||||
Equity: | ||||||||
Common stock, $0.01 par value | 12 | 12 | ||||||
Additional paid-in capital | 58,711 | 58,593 | ||||||
Retained earnings/(deficit) | 8,589 | 588 | ||||||
Accumulated other comprehensive income/(losses) | (1,054 | ) | (1,628 | ) | ||||
Treasury stock, at cost | (224 | ) | (207 | ) | ||||
Total shareholders' equity | 66,034 | 57,358 | ||||||
Noncontrolling interest | 207 | 216 | ||||||
TOTAL EQUITY | 66,241 | 57,574 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 120,232 | $ | 120,480 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20180216005092/en/
Source: The
The Kraft Heinz Company
Michael Mullen (media)
Michael.Mullen@kraftheinz.com
or
Christopher
Jakubik, CFA (investors)
ir@kraftheinzcompany.com